Changes to Canada Not-for-profit Corporations Act Regulations Effective August 2022

Changes to the Canada Not-for-profit Corporations Act (NFP Act) regulations will be in effect August 31, 2022.

These changes come from a bill that passed back in 2018:  An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act. Corporations Canada sent out a reminder about these upcoming changes last month. It explained that these amendments are needed to “allow some of the provisions” of the 2018 “to become operational.” It also included a link to the regulations.

The page starts with the text of all the regulatory amendments … not an easy read! The most helpful, plain language part of the page is found at the very bottom.

What is the purpose for the amendments?

The objective is to “provide detailed requirements around the election of directors,” (under the Canada Business Corporations Act and the Canada Cooperatives Act)the retention and production of documents, and to make technical amendments that allow the amendments to become operational. Of these three categories of change, the second and third are relevant to the NFP Act. We’ll look only at the NFP Act-related changes.

What are the changes?

First, retention & production of documents by the Director. This does not mean your organization’s corporate directors, but the Director appointed by a government minister to administer the NFP Act.

The current retention period for most documents received by the Director is six-years. The Canada Gazette sets out the changes in this Table:

Second, the technical amendments. These do some regulatory ‘clean up’, changing corporate naming rules, and correcting English and French inconsistencies.

On corporate names, the changes:

• moves the term “deceptively misdescriptive” to the definitions section (see s 42(1)) from the section prohibiting deceptive misdescriptive names (see s 57)
• clarifies language prohibiting “confusing names” in s 50
• removes the word “pool” from list of prohibited name elements (see s 51)
• moves the exception regarding the use of family names from s 56(2) (“non-distinctive names” section) to s 54 (“general prohibitions” section)

For the detailed changes, you’ll want to check the text of the regulations. We’ve also set out a more detailed explanation of the specific changes (except for correcting French language inconsistencies) below.

More Detailed Explanation

Section 38 of the Canada Not-for-profit Corporations Regulations is replaced by the following:

38 For the purpose of section 238 of the Act, the prescribed period is six years beginning on the day on which the corporation is dissolved.

Section 38 deals with prescribed time periods relating to the liquidation and dissolution of CNCA corporations. This amendment simply adds a clarification to the existing section. The new text is underlined: “For the purpose of section 238 of the Act, the prescribed period is six years beginning on the day on which the corporation dissolved.”

Section 41 of the Regulations is replaced by the following:

41 (1) For the purpose of subsection 283(3) of the Act, the prescribed documents and classes of documents are

• (a) a notice of registered office referred to in subsection 20(2) or (3) of the Act;
• (b) a notice of directors referred to in subsection 128(1) of the Act;
• (c) a notice of change referred to in subsection 134(1) of the Act;
• (d) the documents referred to in section 153 of the Act; and
• (e) letters patent and supplementary letters patent.

(2) For the purpose of subsection 283(3) of the Act, the prescribed periods are

• (a) in respect of an application for an exemption referred to in section 88 of these Regulations, six years beginning on the day on which the application is received by the Director;
• (b) in respect of a copy of the documents sent under subsection 176(1) of the Act, three years beginning on the day on which the copy is received by the Director;
• (c) in respect of a document evidencing the satisfaction of the Director for the purpose of subsection 213(1) of the Act, two years beginning on the day on which the document is issued by the Director; and
• (d) in respect of an annual return referred to in section 278 of the Act, two years beginning on the day on which it is received by the Director.

Section 41 of the regulations relates to “Records of the Director,” and specifically the mandatory retention periods for certain types of documents. The “Director” is the person appointed by the Minister to carry out the duties and exercise powers under the CNCA (see CNCA ss 1, 281, 283). This is different from “small ‘d’” directors, who are individuals acting as corporate directors (see CNCA s 2(1)).

Section 41 sets out the “prescribed period” (i.e. the time periods) the Director has to keep or produce documents (other than documents listed in ss 128, 134, 153, certificate and attached articles or statement under 276, most recent notice of registered office). The current time period is currently 6 years.

The new section 41(1) includes the list of documents not subject to a prescribed retention period.

The new section 41(2) sets out different prescribed retention periods for different documents.

The key thing to know about this section is that it speaks to the Director’s record retention obligations, not the charity’s record retention obligations.

The definition corporate name in subsection 42(1) of the English version of the Regulations is repealed.

Subsection 42(1) of the Regulations is amended by adding the following in alphabetical order:

deceptively misdescriptive

means, in respect of a corporate name, that the name is likely to mislead the public, in any language, with respect to any of the following:

• (a) the activities, goods or services in association with which it is proposed to be used;
• (b) the conditions under which the goods or services will be produced or supplied or the persons to be employed in the production or supply of the goods or services; and
• (c) the place of origin of the goods or services. (fausse et trompeuse)

Section 42(1) defines terms used in the section related to the requirements and limits for Corporate Names.

The definition of “corporate name” is currently “the name of a corporation.” Yes, you read that correctly. So that definition is being deleted.

The phrase and definition of “deceptively misdescriptive” is added to the list of defined terms for this section of the regulations.

Section 50 of the Regulations is replaced by the following:

50 For the purpose of subsection 13(1) of the Act, a corporate name is prohibited if it is confusing with a name that is reserved under subsection 12(1) of the Act, unless the person for whom the name was reserved consents in writing to the use of the name.

Section 50 falls under the heading “Confusing Names.” This amendment doesn’t appear to change the effect of the section but makes the phrasing clearer.

Paragraph 51(a) of the Regulations is replaced by the following:

• (a) “cooperative”, “coopérative” or “co-op” when it connotes a cooperative venture;

Paragraph 52(d) of the Regulations is replaced by the following:

• (d) carries on the business of a bank, loan company, insurance company, trust company or another financial intermediary that is regulated by the laws of Canada, unless the Superintendent of Financial Institutions confirms in writing that the words that are used in the name and that are regulated by section 983 of the Bank Act, section 47 of the Insurance Companies Act or section 47 of the Trust and Loan Companies Act are authorized to be used under the applicable Act; or

Section 54 of the Regulations is replaced by the following:

54 (1) For the purpose of subsection 13(1) of the Act, a corporate name is prohibited if an element of the name is the family name – whether or not it is preceded by the given name or initials – of an individual who is living or has died within 30 years before the day on which the Director receives the document referred to in section 9 or 201 or subsection 208(4), 211(5), 215(5), 216(6) or 219(3) of the Act or a request to reserve the name under subsection 12(1) of the Act.

(2) Despite subsection (1), the corporate name is not prohibited if

• (a) the individual or their heir or personal representative consents in writing to the use of the individual’s name and the individual has or had a personal or other connection to the corporation; or
• (b) the person proposing to use the corporate name establishes that it has been used in Canada or elsewhere by them or their predecessors so as to have become distinctive in Canada.

Sections 51-55 outline general prohibitions for corporate names.

Section 51 prohibits corporate names that contain certain elements. The new 51(a) removes the word “pool” from the list of prohibited terms/elements.

Section 52 prohibits corporate names that connote the corporate does something, such as carrying on activities under royal authority. The new 52(d) clarifies that the Superintendent of Financial Institutions can consent to the use of a name that connotes the corporation carries on the business of a bank, etc. if authorization can be found in other specific legislation.

Section 54 sets out prohibitions on corporate names that have elements of a family name. There is an exception where the family name is from an individual who is living or has died within 30 years. The amendment moves this exception from the “non-distinctive names” prohibitions (s 56) into the “family name” section of the general prohibitions (s 54). Written consent to the use of the name or prior use in Canada or elsewhere so as to become distinctive in Canada are exceptions to the prohibition.

Paragraph 56(1)(b) of the Regulations is replaced by the following:

• (b) is primarily or only the name — or the first name or family name used alone — of an individual; or

(2) Subsection 56(2) of the Regulations is replaced by the following:

(2) Despite subsection (1), the corporate name is not prohibited if a person proposing to use the corporate name establishes that it has been used in Canada or elsewhere by them or by their predecessors so as to have become distinctive in Canada.

Section 56 deals with non-distinctive names. The new 56(1)(b) revises the section by removing the 30-year exception for using a family name. The new 56(2) clarifies the language but does not substantively change the subsection.

Section 57 of the Regulations is replaced by the following:

57 For the purpose of subsection 13(1) of the Act, a corporate name is prohibited if it is deceptively misdescriptive.

Section 57 deals with “Deceptively Misdescriptive Names”. The current section 57 explains what a deceptively misdescriptive name is meant to capture. The new section 57 simple states that deceptively misdescriptive names are prohibited; the meaning of the term has been moved to the definitions section.